Wednesday, 27 April 2016

Real estate regulatory act 2016

The Real Estate (Regulation and Development ) Act, 2016 has been published by Govt of India through gazette (NO. 16 OF 2016) on 26th March 2016 Chaitra 6, 1938 (saka). Now each State Govt. has to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building, sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector.

All the disputes will be redressed through "Real Estate Regulatory Authority(RERA)". Every state Govt has to set up mechanism within one year. In the interim, either Central or State Government shall designate any other regulatory authority or any officer preferably the Secretary of the department dealing with Housing, as the Regulatory Authority. Further Govt. shall establish the Real Estate Appellate Tribunal to hear appeals from the decisions, directions or orders of the RERA and the adjudicating officer and for matters connected therewith or incidental thereto.

The RERA consist of one chairman and two members . The Chairperson and Members shall hold office for a term not exceeding five Years.

RERA has to dispose complaints within 60 days and Appellate Tribunals will required to adjudicate cases in 60 days.

Consumer has to pay fees as prescribed by the authority for making complaint. RERA may make grading of projects on various parameters of development including grading of promoters;

It has been made mandatory for all commercial and residential real estate projects where the land is over 500 square metres, or eight apartments, to register with the RERA for launching a project. For on-going projects which have not received completion certificate will have to seek registration within 3 months.

Application for registration must be either approved or rejected by the RERA on its website within a period of 30 days from the date of application. Builder has to fill details such as its registered address, type of enterprise/companies (proprietorship/partnership), its affiliated Agents, Contractors, Architects, Structural Engineers and also brief detail of the projects launched by the promoter, in the past five years, whether already completed or being developed, including the current status of the projects, any delay in its completion, details of cases pending, details of type of land and payments pending etc.

For failure to register, a penalty of up to 10 percent of the project cost or three years’ imprisonment may be imposed.

Builder has to upload an approved copy of commencement certificate, sanctioned plan, layout plan by local authority and specifications of the project, proposed facilities to be provided thereof , proforma of the allotment letter, agreement for sale and conveyance deed proposed to be signed with the allottees. Number, type and carpet area of Apartments/Garages for sale in the project. All these declaration with supported by an affidavit has to be filled.

Even real estate Agents who facilitate selling or purchase of properties must take prior registration from RERA. Such Agents will be issued a single registration number for each State or Union Territory, which must be quoted by the Agent in every sale facilitated by him. Builders will have to quote prices based on carpet area only and not super built-up area (carpet area means the net usable floor area of an apartment. This excludes the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment)

Projects for the purpose of renovation or repair or re-development which does not involve marketing, advertising, selling and new allotment of any apartment plot or building will not required to be registered in RERA.

Once consumer makes payment of 10% of total cost, agreement must be registered.

Promoter has to deposite70 per cent of the money in scheduled bank, escrow accounts and money be used only for that particular project. Promoter shall get his accounts audited within six months after the end of every financial year by a chartered accountant in practice. Henceforth, both developers and consumers will have to pay the same rate of interest for delays on their respective parts. Liability of the developers for structural defects will now be five years from the date of handing over possession. Developers cannot make alterations or additions in the sanctioned plans and specifications of the building or the common areas without the consent of at least two-thirds of buyers. The promoter shall not transfer or assign his majority rights and liabilities in respect of a real estate project to a third party without obtaining prior written consent from two-third allottees/consumers.

No civil court shall have jurisdiction to entertain any suit in respect of any matter which the Authority is empowered by this Act. No injunction shall be granted by any court or other authority.

If the promoter fails to comply then allottee shall be entitled to claim the refund of amount paid along with interest and compensation.

Where during an inquiry, the Authority is satisfied that an act in contravention of this Act, or the rules and regulations made thereunder, has been committed and continues to be committed or that such act is about to be committed, the Authority may, by order, restrain any promoter, allottee or real estate agent from carrying on such act until the conclusion of such inquiry of until further orders, without giving notice to such party, where the Authority deems it necessary.

Promoter has to deposit 30% of the penalty cost with appellate tribunal before filing an appeal. Appeal can be made within 60 days from the order of RERA

Consumer, Builder and Agents can be issued such directions from time to time in this act by RERA.

Definition of common areas - Entire land of Project, stair cases, lifts, lobbies, fire escapes, common entrances and exits of buildings, the common basements, terraces, parks, play areas, open parking areas and common storage spaces, the premises for the lodging of persons employed for the management of the property including accommodation for watch and ward staffs or community service personnel, All central services required for electricity, gas, water and sanitation, air-conditioning and incinerating, system for water conservation and renewable energy; water tanks, sumps, motors, fans, compressors, ducts etc., all community and commercial facilities as provided in the real estate project. Hence no promoter can sell parking (open or roof covered) and no amenity space can be sold. It all belongs to society/apartment.

The registration of promoter can be cancelled if promoter makes default under this Act or the rules or the regulations made thereunder; violates any of the terms, involved in any kind of unfair practice or irregularities. Publication of any advertisement or prospectus whether in any newspaper or otherwise of services that are not intended to be offered; the RERA can freeze the account of promoter and can initiate completion of work as per sanction through Govt or through association of buyers.

Promoter bound to insure land and building of the project. The association/society of flat purchasers shall be formed within a period of three months of the majority of allottees having booked their plot or apartment or building. Conveyance deed shall be carried out by the promoter within three months from date of issue of occupancy certificate. Consumer has choice to withdraw the amount paid or continue if builder fails to complete the project. He will get intrest as mentioned in the agreement.

The Appellate Tribunal shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908. The applicant or appellant may either appear in person or authorise one or more CA, CS, Advocate etc. Any person aggrieved by any decision/order of the Appellate Tribunal, may, file an appeal to the High Court, within a period of sixty days from the date of communication of the decision.

Fine upto 10% of total project cost can be imposed on Promoter. If any promoter does not comply with the orders issued he shall be punishable with imprisonment for a term which may extend up to three years or with fine extend up to 20% of estimated cost of project or with both. Penalty for failure of decision / contravention by promoter then fine upto 10%, Agent – upto 5% and Consumer – upto 5% of cost of unit.

Any person whose complaint in respect of matters covered under sections is pending before the Consumer Disputes Redressal Forum / commission on or before commencement of this act he may, with the permission of such Forum/ Commission, withdraw the complaint pending before it and file an application before the

adjudicating officer under this Act.

The Act sets a firm foothold in the real estate sector and would be a foundation for many years to come.

CENTRAL ADVISORY COUNCIL - The Central Government may, by notification, establish a Council to be known as the Central Advisory Council under chairmanship of Minister dealing with housing. Apart from Govt member, the Central Advisory Council shall also consist of not more than ten members to represent the interests of real estate industry, consumers, real estate agents, construction labourers, non-governmental organisations and academic and research bodies in the real estate sector.

Now Maharashtra Govt must take step to establish Real Estate Regulatory Authority in the state and all the previous projects must be scanned by Govt.